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Bull of the Day: Hertz (HTZ)

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Autos
have been a bright light in this otherwise dim economic recovery.
With leisure and corporate travel on the rise,
the car rental business has performing as well.
Today’s bull is the world’s largest auto
renter and a Zacks Rank #1 with some impressive financial statistics.

Company
Description
The Hertz Corporation, which is a subsidiary of Hertz Global Holdings,
Inc.
(HTZ - Snapshot Report), is the world's largest airport / general use car rental
company.

After
their merger with the Dollar-Thrifty brands, the company now operates
approximately
10,400 locations in over 150 countries worldwide.

What
many don’t know is that Hertz also runs one of the world's largest
equipment
rental businesses, Hertz Equipment Rental Corporation. Hertz
rental has 340 branches in the United
States, Canada, China, France, Spain and Saudi Arabia.

Fiscal
year 2012 U.S. revenue was up 25%; adjusted pre-tax income nearly
doubled year
over year.

Future Growth Strategy
Hertz
sees tremendous opportunity in “off-airport” rentals which is an $11
billion market,
growing at 5%-10% annually. HTZ
currently controls less than 12% of the market share in that space,
leaving
tremendous potential upside for growth.

The
company has already begun to penetrate this space and is looking to add
300+
locations annually. They are delivering on
this promise going from 1,580 locations in 2007 to 2,523 locations in
2012, a
gain of 60%.

The
off-airport rental business is a bigger revenue generator than
comparable
airport locations, with longer rentals and a lower cost structure
driving off-airport
margins.

The
company forecasts adjusted pre-tax margins to Increase to at least
14%-15% by
2014 from their current levels of just over 10%. They expect 2013
corporate cash
flow of $500 million to $600 million; this is on the heels of a 39 cent
per
share jump (in cash flow) from FY2011 to FY2012.

At
less than 11 times forward earnings, this stock should still have some
upside
if they continue to deliver at their current levels of growth.

The
Charts
Since the lows of November 2012, shares of NTZ have been unrelenting in
their bull
charge, up over 65% since briefly falling below the 200 day moving
average.

In
the past 10 trading days alone, the stock has seen a 13% increase in
share
value, pushing the stocastics close to the 80 level. At
this stage of the game, the short term trend is a bit overbought, but
support
at $19.17 and $18.25 should provide good cushioning if a pullback were
to
occur.

Being
that shares are at 5-year highs, there isn’t much in the way of
resistance,
other than the broad market’s sentiment and the daily ATR (average true
range)
of $0.74. Use the ATR to gauge an
abnormal movement in the stock.

The
50 day moving average has remained above the 200 day moving average
since
crossing above in October 2012 and the two are diverging, which is a
positive
sign for the longer term bulls.

Look
for a short term pullback in the stock and use that pullback, perhaps
to the
$19.00 area to add some long exposure.

Jared
A Levy is one of the most highly sought after traders in the world and
a former
member of three major stock exchanges. That is why you will frequently
see him
appear on Fox Business, CNBC and Bloomberg providing his timely
insights to
other investors. He has written and published two tomes, “Your
Options Handbook” and “The
Bloomberg Visual Guide to Options”. You can
discover more of his insights
and recommendations through his two portfolio recommendation services:

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